N.J. Stat. § 38:23B-14.3
In the event that a bank shall elect, pursuant to the provisions of section eight hereof, to have its approved veterans' loans insured by the authority, then the authority shall set aside out of the veterans guaranty and insurance fund a reserve fund to the credit of such bank equal to twenty per centum (20%) of the total face amount of all of such bank's approved veterans' loans outstanding at the time of such election. The authority shall add to such reserve fund twenty per centum (20%) of the amount of each approved veteran's loan thereafter made by such bank. In the event that the total of all amounts credited to said reserve fund shall at any time be in excess of the total face amount of all such bank's approved veterans' loans outstanding, then the authority shall withdraw such excess amount from said reserve fund.
The reserve fund so set aside shall be used by the authority to meet and pay any losses incurred by said bank by reason of such loans, but in no event shall any payment be made by the authority to any bank beyond the total balance set aside as the reserve fund for such bank at the time of such payment.
Whenever any approved veteran's note shall be in default to any such bank for thirty days after the date of maturity thereof, or whenever any installment thereon is more than three months in arrears, the authority shall, upon the demand of such bank, purchase from said bank such note by paying to said bank out of the reserve fund set aside to the credit of said bank, as herein provided, the total amount of principal and interest then due and owing to said bank on said note, but in no event shall any payment be made by the authority in excess of the amount then remaining to the credit of said bank in the reserve fund set aside for said bank, as herein provided.
N.J.S. § 38:23B-14.3